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Atlantic breakers attack the white sand remorselessly. The Isles of Scilly may be Britain’s nod to the Caribbean, but today rain is lashing the B&Bs and curio shops, the sand is dressed with bladderwrack, and the ghosts of shipwrecks past can be sensed in the storm-weary sway of palm trees.

Here, on St Mary’s, the largest of the 145 Scilly isles, the usually crystal-clear harbour is muddied as wind churns the waters. But it is not just the weather that is making things murky. “It’s more like Sicily than Scilly here,” says one local. “Islanders are at war,” explains another. Some even call it the Scilly Spring. Indeed, BBC Cornwall has described islanders living in a “culture of fear”.

Local Lib Dem MP Andrew George has been helicoptered over to negotiate. In the shops and bars, there are mutterings, petitions and, in some cases, talk of rebellion. But this is no Passport to Pimlico-style battle for independence. The six-mile-square archipelago is part of the ceremonial county of Cornwall but, since 1890, the islands have had a separate local authority. The Isles of Scilly Order 1930 gave it the status of a county council.

The 2,200 men and women who live here – just five of the islands are inhabited – make their living by exporting spring bulbs and providing old-fashioned seaside holidays, and have no desire to abandon the Union flag. They are proud of their political and royal connections. Harold Wilson holidayed here, while 80 per cent of the land is tenanted from the Duchy of Cornwall. The Duchess recently hosted a private lobster lunch at the St Mary’s Hall Hotel.

No, this is a civil war. The “Cavaliers” include doctors, farmers, shopkeepers, and tourism operators; their “Roundhead” opponents are professional council officers. In the middle are elected councillors, and council workers (10 per cent of jobs are municipal) and tenants, over whose loyalty the fiercest battles rage.

Unrest has been simmering for some time but it was the suspension by the council of a popular head teacher, Bryce Wilby, in May that brought matters to a head, says Keri Jones, managing director of Radio Scilly and its only broadcaster. His is a voice of determined neutrality.

“There has been a notion that anyone connected to the council – whether through direct employment or the need to bid for contracts, through family links or because it houses them – is unable to speak out due to a fear of reprisals, such as job loss or harassment,” he says. Another local says she gave up a council job so she can speak her mind. “We’re all afraid we will end up like Bryce; there is no sense of security.”

The anger is newly pointed but, whatever the rights and wrongs of the Wilby case, resentment against those who run the Scillies stretches back two, 10, 20 years or more – depending on whom you speak to.

Most of the islanders are grateful for the housing and employment created by the council and the EU and UK grants it has secured. Money filters down in wages, tenders and commissions, helping what is one of Britain’s poorer regions. But the style of governance is unpopular. Two years ago, senior council officers were awarded an 18 per cent pay rise, while council employees, like those on the mainland, suffered pay freezes.

Then, three months ago, Bryce Wilby was suspended and not even school governors told why. Mr Wilby ran the Five Islands School, rated outstanding in 2010, with his leadership assessed as “good”.

Under pressure, council officers suggested that apparent financial irregularities were to blame; by this time Wilby had resigned and taken his family back to the mainland. He cannot comment until the terms of his contract expire on August 31, but, speaking on his behalf, a union representative from the National Association of Head Teachers told The Daily Telegraph: “[Bryce Wilby] is not happy about the way things have been handled.” It is understood that Wilby denies having done anything wrong. MP Andrew George is calling for an independent inquiry into the suspension. A petition has also been launched urging councillors to put forward a vote of no confidence in their non-elected chief executive of 15 years, Philip Hygate, and asking for “an external investigation into his conduct and activities”.

In June, 200 people attended a meeting arranged by a local group, Heart of Scilly (Honesty, Ethics, Accountability, Respect, and Truth/Transparency). Two meetings followed.

A letter noting the “feelings of disgust” shared by many at Mr Wilby’s suspension was sent to council officers, school governors and councillors. A website (heartofscilly.com) was established to unite the community, where advice about whistle-blowing was posted. “We want to see islanders empowered and supported, to really get trust back into the community,” says one of the group, Lisa Magill Brown.

“I moved here just two-and-a-half years ago – I’m what old islanders call a 'ship in’ – attracted by the idea of island life. In that time, I’ve become disillusioned and saddened.”

Louise Graham, another Heart founder, grew up on St Mary’s but she says this is no “them-and-us” contretemps. “To be a true Scillonian, you must boast both grandmothers born on the islands, and that’s rare these days. But Scillonians have signed the petition and attended all the meetings”.

I ask her if the fear of the council is justified. “Yes,” she says. “People are concerned if they speak out against the way we are governed, they will lose their livelihoods.” She quit her “dream” job working in rural enterprise for the council in 2007.

What of the 21 elected councillors, all independents? Traditionally, party politics is not welcomed here. The councillors are valued; but some locals believe employed executives decide policy when they should be enacting councillors’ orders.

Shouldn’t locals then stage a coup at the next election (in 2013), and make the changes they want? Louise Graham sighs. “We are making plans. Heart is not a political party; yet it could support candidates, and more of us are looking to the elections with a view to getting involved.”

Amanda Martin, 51, vice chairman of the council and curator of the Isles of Scilly Museum, admits there are ''very genuine concerns in the community’’. But she adds: ''The public should cut us some slack. We abhor bullying and are prepared to root it out.” The current council chairman, Michael Hicks, echoes her concerns, saying: “We will resolve it.”

At Heart’s third meeting on July 19, as reported by scillytoday.com, Radio Scilly’s news site, MP Andrew George said he had received complaints about a “climate of fear”. Neither Mr George nor Mr Hygate were available to comment, but Peter Lawrence-Roberts, council director of finance, says: “I’m very concerned at the strength and genuineness of feeling. I am happy to speak to anyone in confidence, and since the last Heart meeting, I’ve done so. But elected members should be the first port of call.” Mr Lawrence-Roberts added that the council “must rebuild trust and transparency.”